It never ceases to amaze me some of the dumb things management at a company can do, even what I consider good management. This was just filed with the SEC by ARK Restaurants (ARKR):
During September and October 2009 the Company made advances against salary to its Chief Executive Officer totaling $298,146.91. It also loaned $160,000 to the Chief Executive Officer’s former wife. The CEO believed the advances and loan were permissible after he consulted with the Company’s General Counsel. In the latter part of November 2009, the Company reviewed these matters with its auditors. It also informed members of its Compensation and Audit Committees and outside counsel. The Company concluded that the advances and loan may be deemed extensions of credit and violative of the Sarbanes-Oxley Act. The CEO immediately repaid the remaining balance on the advances with interest. The loan to his former wife was repaid in October before the review had begun. The Audit Committee is reviewing the Company’s policies and procedures regarding payments to or for senior management, as well as the Company’s overall internal control procedures. The Audit Committee adopted changes which require that its prior approval be obtained before any extraordinary payments may be made to or at the request of management. It also directed that management undergo governance training pursuant to a program approved by the Audit Committee.
Really? How can you not know that loans to management are no longer permissible? And what does the CEO suddenly need $460k more for anyway? He made almost $1,000,000 last year as CEO. He owns over 1M shares, so with the recent $1 per share special dividend he was just paid $1m from his stock. He’ll be getting another $250k next month when ARKR pays it’s regular dividend. I wonder what’s such a good deal, inquiring minds want to know.
This move makes the recent special dividend and resumption of the quarterly dividend make a little more sense. It’s nice to participate alongside management when they’re paying themselves.
Disclosure: Long ARKR.Please see full disclaimer.
Tags: ARK Restaurants
